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NewsBeth Ashmead-Latham
3 Aug 2018 05:22pm

PwC Australia decline to give evidence in Rio Tinto case

PwC Australia has declined to voluntarily assist defence lawyers in the fraud case brought against Rio Tinto by the Securities and Exchange Committee (SEC)

Lawyers now seek to use Hague convention protocols to pursue additional evidence from the big-four firm, according to the Australian Financial Review.

Having audited the mining company since 1995, PwC Australia had already given evidence to the SEC for the case.

Rio Tinto and its former chief executive, Tom Albanese and former finance director, Guy Elliott are charged with fraud for allegedly attempting to hide a multi-billion dollar loss by inflating the value of coal assets in Mozambique between 2011 and 2012.

When the allegations were announced in October 2017, Stephanie Avakian, co-director of the SEC’s Enforcement Division, said that Rio Tinto’s top executives breached disclosure obligations by “hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure”.

Rio Tinto denied these allegations. When seeking international judicial assistance to obtain the evidence it believes is missing from PwC, its lawyers told a federal judge in New York “The PwC firm’s awareness of the allegedly concealed information is critical to defending against the SEC’s claims”, the Australian Financial Review reported.

The lawyers believe the additional documents they are seeking from PwC personnel who directly interacted with Rio Tinto will give a clearer representation of what was provided to auditors.
In its 2017 report, Rio Tinto announced that it would be calling for tenders from auditors and that PwC was not permitted to tender “due to the length of their tenure”.